In the 65 square miles of the rural constituency of Pendle in Lancashire, many homes are at the end of winding tracks, treacherous and time-consuming to traverse. Its Labour MP, Gordon Prentice, can hope to reach only some of Pendle's 37,000 households for a chat about voting intentions. When there, he usually finds Tory colour brochures on the hall table, delivered second and sometimes first class.

The calling cards, displayed on his website, are in part paid for from a pot of money devoted to Tory candidates in marginal seats, set up to help them compete with incumbent MPs with a parliamentary £10,000 "communication allowance".

Under the rules this is not to be used for political ends, but the Tories insist it frequently is. So a full-colour newspaper, Pendle Matters, was delivered by the Tories almost monthly in the run-up to Christmas.

A guardian.co.uk crowdsourcing exercise saw readers report receiving four-page wraparounds of their local newspaper touting their Tory candidate, and direct mail which if sent to a constituency the size of Prentice's by second-class mail would cost more than £10,000.

The target seat campaign fund is the brainchild of Lord Ashcroft, whose thinking is elucidated in his book on the 2005 election, Smell the Coffee: A Wake-up Call for the Conservative Party.

Since there are rules on what can be spent in an election – but not in the months and years before 1 January of an election year, when an £18m cap comes in – Ashcroft writes that you win not on polling day but in the years running up to it.

The Tory peer has funnelled large amounts of money to marginal seats. In the 2005 general election, of the 36 Tory candidates who unseated Labour and Lib Dem MPs, 24 got funds from his company, Bearwood Corporate Services: £5,000 if up against a small majority (insultingly called an "easy gain", according to Labour MP Martin Linton), or £25,000 for a "battleground seat". All he is supposed to have wanted in return is that the candidate buy him dinner if elected.

Since 2005 the peer has moved from being a hole in the wall outside the party to one of many cashiers inside. David Cameron made him deputy chair. "All contributions, including my own, are given to the party's central fund," Ashcroft said in 2007. Candidates could "submit campaign proposals to a committee at Conservative HQ which I chair".

Ashcroft and his firms have donated more than £6.8m since 2001, according to the Electoral Commission. But since 2005 the vast bulk has been to the central party, not local associations. "It went underground," said Andy Slaughter, Labour MP for Hammersmith and Fulham. "In the last quarter the accounts show the local party got £15,000 from CCHQ, but how can I show how much is Ashcroft's? I can look at their accounts, and look at how much he's giving the party. But I can't prove how much goes directly against me.

"But we reckon they spent tens of thousands in the six weeks before Christmas alone, all sorts of literature."